(Sharecast News) - President Energy announced a drilling and workover update on a number of its assets on Wednesday, reporting that at the Puesto Guardian concession in Argentina's Salta province, it has signed a drilling services contract for three firm wells to be drilled before the end of the year.
The AIM-traded firm said the contract also included an option to retain the rig into the New Year for a further two wells, after drilling the third firm well.
It said that would enable continued drilling in the concession, should the results from the ongoing seismic reprocessing confirm two additional prospects that had previously been identified.
The first three wells would be drilled in the Dos Puntitas field, and the two contingent wells for 2022 in the Pozo Escondido field.
Each well was estimated to cost $3.5m and have a drilling time of 45 days, with a mean success case initial projected oil production of 40 cubic metres, or 250 barrels of oil, per day.
Site clearance for the first well had now started, with the rig due to be mobilised in early October.
Drilling of the first well was now expected to begin by the end of the third week in October, with drilling of all three wells set to be completed by the end of the year, with the final well in that sequence expected to be on-stream in the first part of January.
At the Triche and Simmons 2 wells in the US state of Louisiana, meanwhile, President said both of those wells remained offline, as they had for the last three months, awaiting workover of the Triche well to reinstate production.
The operation of the Triche well was required for the Simmons 2 well to operate, as the Simmons 2 well used the gas produced from the Triche for gas lift.
It said the Triche well had not performed optimally all year due to the progressive breakdown of the downhole gravel pack in the well used to constrain sand production.
The board said the "frustrating delay" in fixing the problem had been "materially exacerbated" by the effects of Hurricane Ida, which devastated the locality.
A rig was now available, but the company said it was awaiting barge availability.
It said it hoped that the workover would be completed by the end of October, and that the wells would work at the same levels as last year, being 300 barrels of oil equivalent net to President, with half being oil.
Realisation prices were "robust", with oil currently at about $70 per barrel, while reserves levels were unaffected, with lower-than=expected depletion due to the constrained production.
"We look forward to the drilling campaign in Salta," said chairman Peter Levine.
"With current prices there comparable to Rio Negro and fixed operational expenditure already covered by existing production, the incremental production will make a good contribution to group.
"Louisiana, for various reasons out of our control, has been frustrating for much of this year."
However, Levine said the firm was "close" to being back on track.
"Nevertheless, the events have given management cause to assess the future of our Louisiana assets within the group, and we will do so at or around the end of the year once the wells are back online and have been producing for a period."
At 1119 BST, shares in President Energy were down 2.22% at 1.71p.
30 Sep 2016 10:57